Featured Product

    EIOPA Consults on Harmonization of Insurance Guarantee Schemes

    July 12, 2019

    EIOPA launched a consultation on its advice on the harmonization of national insurance guarantee schemes across the member states of EU. The consultation paper is a draft response to the call for advice by EC on insurance guarantee schemes. The consultation period ends on October 18, 2019.

    EIOPA received, on February 11, 2019, the EC call for advice on the review of Directive 2009/138/EC2 (Solvency II). The call for advice covered a broad variety of topics, including all topics that EIOPA has started to work on such as insurance guarantee schemes and macro-prudential policy in insurance. EIOPA will respond to the call for advice in the form of a Solvency II Review Opinion, which will include a holistic impact assessment. The Solvency II Review Opinion will be published for consultation in the fourth quarter of 2019. The advice in this paper will be amended with the input of this consultation process and be included in the Solvency II Review Opinion, which will be submitted to EC. 

    The draft advice addresses the following areas of an insurance guarantee scheme:

    • Role and functioning—Insurance guarantee schemes should be set up with the primary aim to protect policyholders, such as to pay compensation swiftly to policyholders for their losses in case an insurer becomes insolvent and/or to ensure the continuation of insurance policies
    • Geographical coverage—Insurance guarantee schemes should be harmonized in accordance with the home-country principle
    • Eligible policies—Insurance guarantee schemes should cover a specific range of life and non-life policies, such as policies where the failure of an insurer could lead to considerable financial or social hardship for policyholders and/or in case of lines of business with a high market share in cross-border business in Europe
    • Eligible claimants—Insurance guarantee schemes should cover natural persons as well as micro- and small-size legal entities
    • Coverage level—Insurance guarantee schemes should have a harmonized minimum coverage level
    • Funding—Insurance guarantee schemes should have adequate funding systems in place; they should, for instance, be funded on an ex-ante basis and, if needed, complemented by ex-post funding
    • Disclosure—There should be requirements for adequate, clear, and comprehensive disclosure about the insurance guarantee schemes protection to consumers and policyholders
    • Cross-border cooperation and coordination—Respective arrangements between national Insurance guarantee schemes should be in place

    Overall, EIOPA is of the view that every member state should have a national guarantee scheme in place for the protection of policyholders in the event of a failure of an insurer, which should meet a minimum set of harmonized features. Therefore, EIOPA calls for the establishment of a European network of national insurance guarantee schemes, which are sufficiently harmonized and adequately funded. Additionally, the proportionality principle should be taken into consideration to avoid excessive burdens on insurers and member states. In this context, a flexible approach for the legal structure and setup of the schemes is important. EIOPA advises to conduct a review at least every five years, after the harmonized framework becomes effective.

     

    Related Links

    Comment Due Date: October 18, 2019

    Keywords: Europe, EU, Insurance, Solvency II, Insurance Guarantee Schemes, Macro-Prudential Policy, Solvency II Review, EIOPA

    Featured Experts
    Related Articles
    News

    APRA Consults to Standardize Submission Date for Quarterly Reporting

    APRA proposed to standardize quarterly reporting due dates for authorized deposit-taking institutions. The proposed standardized due date is 35 calendar days after the last day of the reference quarter, which will create a 14-calendar-day extension for credit unions and building societies.

    November 08, 2019 WebPage Regulatory News
    News

    EBA Publishes Methodology and Draft Templates for Stress Tests in 2020

    EBA published a package for the 2020 EU-wide stress test exercise for banks.

    November 07, 2019 WebPage Regulatory News
    News

    EC Publishes Results of Fitness Check of Reporting Requirements in EU

    EC published results of the fitness check of supervisory reporting requirements in financial services legislation in EU.

    November 07, 2019 WebPage Regulatory News
    News

    BCBS Assesses NSFR and LE Rules in Argentina and China as Compliant

    BCBS published reports that assess the implementation of net stable funding ratio (NSFR) and large exposures, or LE, framework in Argentina and China.

    November 07, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of Plenary Meeting in Paris

    At the meeting, the Plenary reviewed vulnerabilities in the global financial system, fintech developments (including developments in the crypto-asset markets), ongoing work of FSB, and the work program for 2020.

    November 07, 2019 WebPage Regulatory News
    News

    HKMA Highlights Technology Initiatives at the Hong Kong FinTech Week

    HKMA co-organized, with InvestHK, the Hong Kong FinTech Week 2019, which was a five-day flagship fintech event that attracted thousands of attendees worldwide.

    November 06, 2019 WebPage Regulatory News
    News

    ECB Report on Fallback Provisions in Contracts Referencing EURIBOR

    ECB published a report, by private sector working group on euro risk-free rates, presenting recommendations for fallback provisions in contracts for cash products and derivative transactions referencing EURIBOR.

    November 06, 2019 WebPage Regulatory News
    News

    EC Regulation on Homogeneity of Underlying Exposures in Securitization

    EC published the Delegated Regulation 2019/1851 regarding the regulatory technical standards on the homogeneity of the underlying exposures in securitization.

    November 06, 2019 WebPage Regulatory News
    News

    FSI Examines Regulatory Approaches on Climate Risk Assessment

    The Financial Stability Institute (FSI) of BIS published a paper that examines the regulatory approaches being used for climate risk assessment in the insurance sector, in particular through enterprise risk management (ERM) frameworks.

    November 06, 2019 WebPage Regulatory News
    News

    SRB Launches Q&A Process for Resolution Reporting

    SRB has setup a dedicated solution for raising questions on the resolution reporting.

    November 06, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4112